Authorizing the Issuance of Revenue Bonds re: improvements to the Waterworks, not to exceed Twenty-Two Million Five hundred thousand dollars (22,500,000); including the issuance of notes in anticipation of Bonds.

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transferred to the Sinking Fund if necessary to prevent a default in the payment of principal of or interest on the outstanding bonds of the works. SECTION 14. Sinking~und. There is hereby continued a fund of the utility created and designated in the Parity Ordinance as the Sinking Fund (the "Sinking Fund"), to be used for the payment of the principal of and interest on bonds which by their terms are payable from the Net Revenues, and for the payment of any fiscal agency charges in connection with such payment. The Sinking Fund is divided into two accounts designated as the Bond and Interest Account and the Debt Service Reserve Account, which are pledged for the purposes set forth below. There shall be set aside and deposited in the Sinking Fund, as available, and as hereinafter provided, a sufficient amount of the Net Revenues to meet the requirements of the Bond and Interest Account (also shown on the books of the utility as the Bond Sinking Fund) and of the Debt Service Reserve Account. Such payments shall continue until the balance in the Bond and Interest Account, plus the balance in the Debt Service Reserve Account, equals the amount needed to redeem all of the then outstanding bonds. (a) Principal and Interest Account. There shall be transferred, on the last day of each calendar month, from the Reven~ie Fund and credited to the Bond and Interest Account an amount equal to the sum of one-twelfth (1/12) of the principal and one-sixth (1/6) of the interest on all then outstanding bonds payable from Net Revenues on the next succeeding principal and interest payment dates, until the amount so credited shall equal the principal payable during the next succeeding twelve (12) calendar months and the interest payable during the next succeeding six (6) calendar months. There shall similarly be credited to-the account any amount necessary to pay when due the bank fiscal agency charges for paying principal of and interest on the bonds as the same become payable. The City shall, from the sums deposited in the Sinking Fund and credited to the Bond and Interest Account, remit promptly to the bank fiscal agency sufficient moneys to pay the principal and interest on the due dates thereof together with the amount of bank f scal agency charges. (b) Debt Service Reserve Account. On the date of issuance of the 1997 Bonds, there shall be deposited to the Debt Service Reserve Account from the proceeds of the sale of the 1997 Bonds an amount to constitute an appropriate reserve to facilitate the marketing of the 1997 Bonds, which reserve amount shall equal the lesser of ten percent (10%) of the proceeds of the 1997 Bonds, the maximum annual debt service on the 1997 Bonds, and 125% of the average annual debt service on the 1997 Bonds. After the issuance of the 1997 Bonds, the City shall maintain the balance in the Debt Service Reserve Account in an amount equal to the Reserve Requirement. For these purposes, "Reserve Requirement" means the lesser of ten percent (10%) of the proceeds of the 1997 Bonds and any bonds ranking on a parity therewith (including the Panty Bonds), the maximum annual debt service on the 1997 Bonds and such parity bonds, and. 125 % of the average annual debt service on the 1997 Bonds and such parity bonds. The Debt Service Reserve Account shall constitute the margin for safety and as protection against default in the payment of principal of and interest on the 1997 Bonds and such parity bonds and the moneys in the Debt Service Reserve Account shall be used to pay current principal and interest on the 1997 Bonds and such parity bonds to the extent that moneys in the Bond and Interest -18-